A study on the J-POWER’s Complete Privatization

Transformation from a National Policy Mandated Company to a General Private One

Abstract

In 1951, nine electric power companies (NEPC) were established by the reorganization of the electric power industry in the post-Second World War period. These companies exhibited characteristics of a private company, including vertical integration of generation, transmission, and distribution, as well as regional monopoly. In the following year, the Electric Power Development Company (J-POWER), a wholesale power company, was established by a government initiative under the Electric Development Promotion Law. This initiative was undertaken with the objective of overcoming serious power shortages and increasing the supply of electricity.

J-POWER was only able to justify its raison d’etre through projects that NEPC had been unable to construct or had not yet initiated development on. In this context, it is important to note that the company was willing to take on high-risk and innovative projects, such as the construction of the Sakuma Dam (a large-scale hydroelectric power station) ,the promotion of large-capacity imported-coal-fired power stations, and the development of highhead-large-scale pumped storage power stations, the installation of the Sakuma Frequency Converter Station interconnecting the 50 Hz and 60 Hz power systems and the construction of the Kitahon High Voltage DC Link across the Tsugaru Strait. In carrying out the aforementioned activities, the company has amassed a range of management resources, including facilities, technology, organizational capability, and social reputation.

J-POWER experienced three significant turning points. First, in August 1967, the Administrative Supervisory Committee of the First Provisional Administrative Investigation Commission recommended its abolition. Secondly, in March 1983, its continued existence was approved, subject to consideration of the shareholding ratio, shareholder composition, shareholder dividends, and the vitalization of managerial function, as outlined in the final report of the Second Provisional Administrative Investigation Commission. Thirdly, in October 2004, it was listed on the First Section of the Tokyo Stock Exchange, thus achieving its complete privatization.

This paper will describe the reasons why J-POWER has continued to exist up to the present, the rationale behind its decision to fully privatize, and the manner in which it was able to achieve complete privatization.